Germantown-based pharmaceutical firm changes hands

A fast-growing supplier of pharmaceutical chemicals and biotech drugs based in Germantown announced a wholesale change of ownership Thursday but said its expansion plans remain intact.

"We will be creating 30 to 50 new jobs in Germantown in 2013," predicted Brian Scanlan, president and chief executive of Cambridge Major Laboratories Inc.

The biotech company employs 155 at its two facilities in Germantown, which represent its entire North American operations. In 2007, it acquired a similar pharmaceutical drug producer in The Netherlands in order to establish a European presence.

With nearly $100 million in annual revenue, Cambridge doubled in size in the last two years, Scanlan said. Revenue has been growing an average of 20% annually for the last five years.

In its announcement Thursday, Cambridge said its majority owner for the past six years, private-equity firm Arlington Capital Partners, has sold its entire stake, which it held throughout a period of brisk growth. A new private-equity partner, American Capital Ltd., which is publicly traded on the Nasdaq exchange, is paying $200 million to take its place.

Scanlan said he will retain leadership even as ownership changes hands.

Cambridge occupies an unusual niche. It does not develop new therapies. But the emerging biotech companies and established multinational pharmaceutical companies that create and patent new drugs turn to labs like those at Cambridge to outsource the manufacturing of active drug ingredients so they can be produced in sufficient volumes for clinical samples and later commercial use.

That has created a sophisticated workforce at the Germantown labs. Of the 155 employed at Cambridge, half hold degrees in science. And half of those hold doctorate-level degrees, Scanlan said.

Last year, Cambridge produced more than 100 active pharmaceutical ingredients in the early and mid-stages of development and another 14 for commercial distribution.

Thanks to American regulatory hurdles, which raise the barriers of entry for rivals, 13-year-old Cambridge has few competitors. That scarcity of rivals in the United States is what has driven growth, Scanlan said.

Longer-term expansions are also in the works, Scanlan said in a telephone interview.

The company produces active pharmaceutical ingredients for therapies treating cancer as well as neurological and rare genetic diseases. But it actively is seeking to acquire firms that make the inactive ingredients that carry the active compounds as pills, gels or ointments, Scanlan said.

The new owner, American Capital, has a stable of life sciences companies with aggregate revenue of over $600 million, some of them producing inactive ingredients. Those holdings could facilitate the acquisition process, Scanlan predicts.

"It's very synergistic," he said of the new shareholder structure.

About John Schmid

John Schmid covers economics, business and other topics for the Journal Sentinel.